tomkaz

Tax rates cut and tax revenues rise? How does that happen?

32 posts in this topic

Remember when we were told supply-side economics is a lie and does not lead to higher tax revenues?

 

Remember when we were told that Trump’s tax cuts would never pay for themselves with incremental economic activity and tax revenues? 

 

Remember when we were told that the Trump tax cuts would, on their own, blow a big new hole in the deficit?

 

The latest monthly budget report from the non-partisan CBO finds that revenues collected US federal income taxes were $76Bn higher in 1H2018 than they were for the same period the year earlier. Apparently, that is a 9% revenue jump even thought the lower withholding tables when into effect back in February. 

 

The CBO says that the gains “largely reflect increases in wages and salaries”. 

 

For the entire federal fiscal year to date, from last October, all federal revenues are up by $31Bn, a 1.2% increase over the same period in the prior fiscal year. 

 

Now, what was that about Trump driving the economy into a ditch?

 

Oh, and for those who are going to post something about the deficit, etc. I am not arguing that the deficit is not large. This is about cause and effect on taxes and revenues. 

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Tom it’s not a full correlation between tax cuts and revenue increases. Take a look at Kansas for a good example. Furthermore, the CBO predicts less revenue over the longer term. It is far too soon to evaluate the impact.

 

What we have here is increased deficit spending in a strong economy. I would expect it to push revenues higher. The real question will be what happens once the sugar high wears off. 

 

Plus, you’re using a straw man here. No one says that tax cuts can’t lead to more revenue. It’s the premise that they always lead to more revenue that is faulty. 

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Tough to compare a state with no money printing press to a country that can print and manipulate the value of their money.

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3 mins ago, dena said:

Tough to compare a state with no money printing press to a country that can print and manipulate the value of their money.

Agreed. Which makes Kansas a purer example of the economic principle.

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8 mins ago, The Dude said:

Tom it’s not a full correlation between tax cuts and revenue increases. Take a look at Kansas for a good example. Furthermore, the CBO predicts less revenue over the longer term. It is far too soon to evaluate the impact.

 

What we have here is increased deficit spending in a strong economy. I would expect it to push revenues higher. The real question will be what happens once the sugar high wears off. 

 

Plus, you’re using a straw man here. No one says that tax cuts can’t lead to more revenue. It’s the premise that they always lead to more revenue that is faulty. 

I thought the premise was that tax cuts always lead to less revenue.

 

I guess it depends on the entrenched partisan you speak to.

 

I have never heard anyone claim that tax cuts will always lead to increased revenue and I have heard the opposite,  but I beleive that people feel our tax burden is too high and there is cuts to be made that can further stimulate growth.

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2 mins ago, JimG said:

I thought the premise was that tax cuts always lead to less revenue.

 

I guess it depends on the entrenched partisan you speak to.

 

I have never heard anyone claim that tax cuts will always lead to increased revenue and I have heard the opposite,  but I beleive that people feel our tax burden is too high and there is cuts to be made that can further stimulate growth.

I've never heard someone say that they always lead to less revenue. I've heard the opposite many times including quite a bit on this very forum.

 

As for our tax burden, technically, it's not high enough. We don't even cover our spending. 

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The Wall Street Journal

U.S. government revenue drops after tax cuts

Published: July 12, 2018 4:56 p.m. ET

WASHINGTON—Corporations taking advantage of new, lower tax rates reduced their payments to the federal government last month.

The Treasury Department on Thursday said government receipts fell 7% in June compared with the same month a year earlier, including a 33% drop in gross corporate taxes. Individual withheld and payroll taxes were down 5% from June 2017, while non-withheld individual taxes rose by 7%.

Even though revenues fell, the budget deficit narrowed to $74.86 billion in June, compared with $90.23 billion in June 2017, due to a 9% drop in government outlays. The spending decline largely reflected some accounting shifts and not actual spending changes. For instance, the Education Department revised estimates for the net costs of past loans and loan guarantees, according to a Congressional Budget Office analysis.

More broadly, the federal deficit is swelling as government spending outpaces revenues. The budget gap totaled $607.1 billion in the first nine months of the 2018 fiscal year, 16% larger than the same point a year earlier. So far in the current fiscal year, which will end Sept. 30, total spending rose 4% compared with the same period a year earlier and total revenues rose 1%.

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Hillarious.. it's been said a million times here by linear thinking progressives who cant figure out how much to tip on a restaurant bill without pulling out their phone calculator.

 

So go buy yourself a Lamborghini and then tell your boss that your income isnt high enough to cover your spending.

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Just now, JimG said:

Hillarious.. it's been said a million times here by linear thinking progressives who cant figure out how much to tip on a restaurant bill without pulling out their phone calculator.

 

So go buy yourself a Lamborghini and then tell your boss that your income isnt high enough to cover your spending.

It really hasn't. I can't remember it being said once. 

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Posted (edited)

16 mins ago, The Dude said:

Lol. Oops. Didn't think I had to fact check tomkaz.

You should always factcheck everyone, but not me in this case. Using a single month to counter a discussion of six month’s data is kinda weak tea. Like the comparison of weather and climate, no?

 

Also, well, see below. 

Edited by tomkaz

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4 mins ago, The Dude said:

It really hasn't. I can't remember it being said once. 

That's called partisan listening skills

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7 mins ago, PeterO said:

The Wall Street Journal

U.S. government revenue drops after tax cuts

Published: July 12, 2018 4:56 p.m. ET

WASHINGTON—Corporations taking advantage of new, lower tax rates reduced their payments to the federal government last month.

The Treasury Department on Thursday said government receipts fell 7% in June compared with the same month a year earlier, including a 33% drop in gross corporate taxes. Individual withheld and payroll taxes were down 5% from June 2017, while non-withheld individual taxes rose by 7%.

 

First, there are two reports produced each month, one by Treasury and one by CBO. I am talking about the latter, you the former. 

 

Second, I was referencing the first six months of CY2018, not a single month. 

 

Third, “CBO estimates that the federal government realized a deficit of $75Bn in June 2018, $15Bn smaller than the shortfall in June 2017. 

 

Fourth, CBO observes “Withheld taxes declined in June for two reasons. First, June 2018 had one fewer workday than June 2017. Second, the share of wages withheld for taxes was lower......

 

Lastly, Total Spending in June 2018 was $389Bn, CBO estimates, $40Bn less than the sum in June 2017. 

 

Focusing on one month is disingenuous at best.

 

Carry on. 

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